Mar 8 The Essence of Strategy

You’ve previously heard my favourite definition of Strategy; saying no to good things.

How do we actually make that work for us in daily life?

At a board strategy day last year, I heard someone casually frame it perfectly.It was so profound I had to quickly write it down on my phone.“What we really should talk about are the tradeoffs, which are really the essence of strategy”

Genius.

One of the most valuable skills to develop as a leader is the ability to make wise tradeoffs.Not to try and have it all, but to make the best possible trades; foregoing something nice in order to keep something more important.

This skill applies to all facets of life.Work, relationships, household budgets, choosing where to go on holidays, what car you buy, where you spend your time, even what to do for dinner.

An example of a tradeoff is the old manufacturing dilemma: Cheap, Fast and Good. Pick any two.

Or for those of you at uni: Study, Sleep, Social Life.Pick any two.

We can break it down further.Firstly, it requires you to assess the situation accurately.What’s really at stake?What’s on offer?What will be the long term impacts of this decision?

Next, what are my/our priorities?Which is the most important?

Finally, how much will each choice contribute to our situation?How much do we gain?How much do we lose?We need a way of measuring things, be it in dollars, time, strength of relationships, opportunity costs, etc.

This gets complicated when we don’t communicate our priorities within our teams.How can we agree on a decision if we’re each aiming for different targets?

This communication needs to be frequent, because our priorities change over time.In startup, they can change every few months.

“No they don’t Isaac, we’ve always said that we prioritize these eleven things…”You can’t have eleven top priorities.You can’t.The tradeoffs that matter are going to be between those eleven priorities.

Maybe you can have 2-3, but it really should be 1.This way, you and your team can pre-empt how tough decisions will be made in the future.What’s the one thing you’re focused on now?

Revenue growth?Profit maximization?Improving your culture?Raising your profile?Improving your reputation?Expanding into a new business?Expanding into a new market?Doubling your social impact?

You can’t make all of them the top priority.You can do them all over time, but not at the same time

In the book Essentialism, Greg McKeon uses the illustration at the top of the page.It shows what happens when we say no to things that aren’t our top priority, and funnel our energy towards what’s most important.

We can’t do everything.We certainly can’t do everything well.The skill of making wise tradeoffs is the ability to forego what doesn’t contribute towards the most important goal.